VOLUME XLIV | NUMBER XLI | June 2021
If You are Going to Exclude Active Funds from Your Retirement Plan Investment Lineup, Have Darn Good Reasons
The tidal surge of funds flowing from actively managed funds into passive funds reached a tipping point in 2019, when Morningstar preliminary data indicated that passive U.S. equity assets would surpass active equity assets for the first time. This inflection point was widely anticipated. Over the prior decade, active domestic equity funds leaked $1.3 trillion in outflows, while their passively managed counterparts logged nearly $1.4 trillion in the opposite direction. Good Reasons to Include Actively Managed Funds Actively managed funds may have higher fees than their passive counterparts, but sometimes the active management results in outperformance. This allows for higher potential returns, which can be a goal of some plan participants with higher risk tolerance, who aim to beat the market versus “own” it. Since...
A newly proposed Senate bill by Senate Finance Chairman Ron Wyden, would enable participants to continue saving for retirement while repaying their student debt even in the event that they can’t afford to make their own contributions to a 401(k) plan. This feature could be offered at the option of the employer and would apply only for expenses pertaining to higher education. Student loan payments would be eligible to earn “matching” 401(k) retirement contributions from employers under a bill introduced on Thursday, April 29, 2021. You may recall that last year, the U.S. froze payments and interest for all federal student loans in response to the coronavirus pandemic. Those protections are expected to remain in place at least through the end of September. Adding a...
Retirement income products, or in-plan annuity options, have been available for over a decade but their utilization has been stagnant due to concerns about price, portability, and convertibility. With the recent market volatility in 2020 and recent passing of the SECURE Act, we have seen an industry push towards the research, development, and implementation of what are now referred to as “guaranteed income products.” How should plan fiduciaries select and monitor these products? Guaranteed income products bridge the gap between defined benefit and defined contribution plans. The last point of interest for these types of products occurred circa 2012, when the Department of Labor (DOL) last released guidance and brought this need to the surface. While there was little uptake at the time due to...
Download the PDF below to see how you can reduce the risk of fraud and loss to your retirement account by following a few basic rules.